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Gibraltar Industries, Inc. (ROCK - Free Report) expands its residential product offering with the acquisition of Quality Aluminum Products (QAP). The transaction is valued at $54 million in cash, subject to customary adjustments for working capital. The company expects the transaction to be immediately accretive to earnings.
Share price of Gibraltar gained by a meager 0.2% on Aug 23 following the news.
Buyout Synergies
QAP makes aluminum and steel products that include soffit, fascia, trim coil, rain carrying products and aluminum siding, and operates in the wholesale markets of the Midwest, Northeast and South.
QAP generated revenues of $93 million and adjusted EBITDA of $11.5 million over the trailing 12 months that ended Jul 31, 2022.
Bill Bosway, Chairman and CEO, said, "Adding a market leader like QAP supports our overall objective of accelerating growth, earnings, and market participation while also adding a best-in-class operating team to the Gibraltar organization."
Strategic Efforts to Drive Growth
Gibraltar is progressing well operationally and financially on the back of its growth strategy. Over the past 12 months, the company has migrated from a Four-Pillar strategy to a Three-Pillar Strategy, with the operating foundation focused on three core tenets: Business Systems, Portfolio Management and Acquisitions and Organizational Development.
Now, the second strategic pillar comprises Portfolio Management and Acquisitions. Through this pillar, the company remains focused on optimizing the business portfolio and ensures sustainable investment of human and financial capital to provide profitable growth, while expanding customer relations and market reach. During 2021, the company’s 30% revenue growth was mainly attributable to 21% contributions from acquisitions.
Meanwhile, the company’s Residential Products business has been performing pretty well in the last few quarters. Second quarter net sales saw a 5.3% increase, driven by the Residential segment, backed by a 13% increase in pricing to customers. Residential segment net sales increased 21.9%, marking the eighth consecutive quarter of double-digit growth. Segment’s adjusted operating and EBITDA margins grew 190 and 150 basis points, respectively, on favorable price/cost management, supply chain initiatives, labor management, volume leverage and 80/20 initiatives. The segment’s 80% to 90% business banks on existing home repair, either due to the home aging or weather damage. Historically, home repairs have not seen a significant impact from changing interest rates, repairs.
Now, the latest addition of QAP to the company’s portfolio would further expand its product offering in the residential market and create a footprint in additional regional markets supporting both retail and wholesale customers.
Gibraltar has gained 10.9% in the past three months compared with the Zacks Building Products - Miscellaneous industry’s 2% growth. This Zacks Rank #2 (Buy) stock is well positioned to gain from its growth strategy and robust Residential Products segment’s performance. Also, the U.S. administration’s endeavors to boost renewable energy and the infrastructure of the country bodes well for the company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Some Other Top-Ranked Stocks in the Construction Sector
United Rentals, Inc. (URI - Free Report) , a Zacks Rank #1 company, has been benefiting from a broad-based recovery of activity across end markets served. Also, higher margins from rental revenues and used equipment sales are added benefits.
The consensus mark for URI’s 2022 earnings rose to $31.73 per share from $31.66 in the past seven days. The estimated figure suggests 43.8% year-over-year growth.
EMCOR Group (EME - Free Report) , a Zacks Rank #2 company, has been benefiting from double-digit growth across the U.S. segments, resilient end markets, solid RPOs and bolt-on acquisitions.
The consensus mark for EME’s 2022 earnings rose to $7.73 per share from $7.66 in the past 30 days. The estimated figure suggests 9.5% year-over-year growth.
UFP Industries, Inc. (UFPI - Free Report) , a Zacks Rank #2 company, has been benefiting from the diversity of markets, higher organic unit sales, solid contributions from buyouts, new product innovation and an improved pricing model.
The consensus mark for UFPI’s 2022 earnings rose to $10.56 per share from $9.60 in the past 60 days. The estimated figure suggests 22.9% year-over-year growth.
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Gibraltar (ROCK) Acquires QAP, Boosts Residential Offerings
Gibraltar Industries, Inc. (ROCK - Free Report) expands its residential product offering with the acquisition of Quality Aluminum Products (QAP). The transaction is valued at $54 million in cash, subject to customary adjustments for working capital. The company expects the transaction to be immediately accretive to earnings.
Share price of Gibraltar gained by a meager 0.2% on Aug 23 following the news.
Buyout Synergies
QAP makes aluminum and steel products that include soffit, fascia, trim coil, rain carrying products and aluminum siding, and operates in the wholesale markets of the Midwest, Northeast and South.
QAP generated revenues of $93 million and adjusted EBITDA of $11.5 million over the trailing 12 months that ended Jul 31, 2022.
Bill Bosway, Chairman and CEO, said, "Adding a market leader like QAP supports our overall objective of accelerating growth, earnings, and market participation while also adding a best-in-class operating team to the Gibraltar organization."
Strategic Efforts to Drive Growth
Gibraltar is progressing well operationally and financially on the back of its growth strategy. Over the past 12 months, the company has migrated from a Four-Pillar strategy to a Three-Pillar Strategy, with the operating foundation focused on three core tenets: Business Systems, Portfolio Management and Acquisitions and Organizational Development.
Now, the second strategic pillar comprises Portfolio Management and Acquisitions. Through this pillar, the company remains focused on optimizing the business portfolio and ensures sustainable investment of human and financial capital to provide profitable growth, while expanding customer relations and market reach. During 2021, the company’s 30% revenue growth was mainly attributable to 21% contributions from acquisitions.
Meanwhile, the company’s Residential Products business has been performing pretty well in the last few quarters. Second quarter net sales saw a 5.3% increase, driven by the Residential segment, backed by a 13% increase in pricing to customers. Residential segment net sales increased 21.9%, marking the eighth consecutive quarter of double-digit growth. Segment’s adjusted operating and EBITDA margins grew 190 and 150 basis points, respectively, on favorable price/cost management, supply chain initiatives, labor management, volume leverage and 80/20 initiatives. The segment’s 80% to 90% business banks on existing home repair, either due to the home aging or weather damage. Historically, home repairs have not seen a significant impact from changing interest rates, repairs.
Now, the latest addition of QAP to the company’s portfolio would further expand its product offering in the residential market and create a footprint in additional regional markets supporting both retail and wholesale customers.
Gibraltar has gained 10.9% in the past three months compared with the Zacks Building Products - Miscellaneous industry’s 2% growth. This Zacks Rank #2 (Buy) stock is well positioned to gain from its growth strategy and robust Residential Products segment’s performance. Also, the U.S. administration’s endeavors to boost renewable energy and the infrastructure of the country bodes well for the company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Some Other Top-Ranked Stocks in the Construction Sector
United Rentals, Inc. (URI - Free Report) , a Zacks Rank #1 company, has been benefiting from a broad-based recovery of activity across end markets served. Also, higher margins from rental revenues and used equipment sales are added benefits.
The consensus mark for URI’s 2022 earnings rose to $31.73 per share from $31.66 in the past seven days. The estimated figure suggests 43.8% year-over-year growth.
EMCOR Group (EME - Free Report) , a Zacks Rank #2 company, has been benefiting from double-digit growth across the U.S. segments, resilient end markets, solid RPOs and bolt-on acquisitions.
The consensus mark for EME’s 2022 earnings rose to $7.73 per share from $7.66 in the past 30 days. The estimated figure suggests 9.5% year-over-year growth.
UFP Industries, Inc. (UFPI - Free Report) , a Zacks Rank #2 company, has been benefiting from the diversity of markets, higher organic unit sales, solid contributions from buyouts, new product innovation and an improved pricing model.
The consensus mark for UFPI’s 2022 earnings rose to $10.56 per share from $9.60 in the past 60 days. The estimated figure suggests 22.9% year-over-year growth.